It’s the first week of November, and you’re eager to get a head start on crossing off items on the holiday shopping list. After a productive day at Pacific Centre, you leave the mall with half a dozen bags grinning from ear to ear. However, as you sprawl your day’s haul on the mattress, thoughts of doubt begin to rise. Did I really need that second pair of leather boots? Or that tacky sweater I will wear once to a Christmas party, then never again?
Credit: Jason Yormark / Rock Your Ugly Christmas Sweater
You quickly double-check to see how long you have to decide. Printed at the bottom of the wrinkled receipt is “90-days for a full refund or exchange”. You breathe a sigh of relief and thank the store for their generous returns policy and decide to make up your mind later.
However, you may be surprised to find out retailers are not being generous just out of the goodness of their hearts and your reaction may be exactly what they wanted.
To get a better understanding on how return policies could affect consumer behavior, researchers from the University of Texas recently conducted a study by reviewing five key elements in return policy: time, money, effort, scope and exchange. Surprisingly, the study found that businesses actually benefit from giving ample time for returns. Counter-intuitive as it may be, retailers with more lenient return policies actually result in more sales and less returns.
Why is that?
UT Dallas doctoral candidate Ryan Freling, who conducted this research, said that this is perhaps a result of what is known as the “endowment effect”. The longer a customer has a product in their hands, the more emotionally attached they are to it. If customers don’t feel pressured to make a decision for taking it right back to the store, they more likely to keep it.
Similarly, I have noticed that when I make a questionable purchase at a store with a strict returns policy, I am very likely to second-guess my purchase. However, buying a similar item from a more flexible company like Costco, which offers almost unlimited time for returns, I am more likely to never return the product at all.
Credit: GoToVan / Flickr
With the holiday shopping season fast approaching, whether it’s the tacky sweater from grandma or an impulse shoe purchase, we are all guilty of returning some unwanted merchandise. Besides being more careful with what you buy, it is a good idea to always check the retailer’s return policy and do not remove tags until you’re sure you’re going to keep it. If you decide to return your purchase, just be sure bring your receipt and don’t delay.
Justin Tao
